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What is alden variable cost ratio

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Reference no: EM131601811

Question - Cost volume profit analysis of managerial accounting

Alden company prepared the following budget income statement for the coming year.

Sales revenue               $ 515000

Total variable cost         402950

Contribution Margin       112050

Total Fixed costs            64,800

Operating income          47250

Required:

1. What is Alden's variable cost ratio? What is its contribution margin ratio?

2. Suppose Alden's actual revenues are $35000 more than budgeted. By how much will operating income increase? Give the answer without preparing a new income statement.

3. How much sales revenue must Alden earn to break even? Prepare a contribution margin income statement to verify the accuracy of your answer.

4. What is Alden's expected margin of safety?

5. What is Alden's margin of safety if sales revenue is $380000?

Reference no: EM131601811

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